e europe

Fund managers to target East Europe property
WILLIAM LYONS

TWO Scottish fund managers have returned home to set up a property
investment vehicle aimed at the burgeoning Eastern Europe market.

Castle European Estates, founded by David Stewart Howitt and Robbie
Morrison, will focus on investment opportunities in the real estate
sector in emerging Europe and Transcaucasia.

The firm, which will open in Edinburgh's Rutland Square tomorrow, is
understood to be in the process of raising more than £100m worth of
funds from institutional investors in the UK, Europe and the Middle
East.

Stewart Howitt, a former economic adviser to the Foreign and
Commonwealth Office who has spent the last 12 years in the region,
said the company was ideally positioned to help investors access the
opportunities within the rapid economic growth of these countries.

He said: "We will be looking at transition economies in emerging
Europe, principally non-EU and non-Russia. The economies in those
regions are not benefiting from either Russian growth, Russian near
abroad investment dynamics or Europeanisation.

"On the real estate side we would be looking at returns from 20% plus.
We aim to achieve this through the nature of change where regional
economies, national economies and sub-regional economies move from one
status to another. As a result you get an uplift because of increased
domestic demand.

"Thus far these economies have held up quite well. Emerging markets
have historically always taken a very early and substantial hit in
circumstances not dissimilar to what we are seeing in the global
market economies now. But the principle factor driving change is the
domestic growth issue and the key driver is the tipping point in the
transition to a full market economy."

Castle European is a 50-50 joint venture between EMAC Capital, an
alternative asset manger focused on private equity and real estate
investments in Eastern Europe, and Osprey Asset Strategies, a
specialist international real estate sector asset manager. Its core
business will be in the transition markets of Eastern Europe and
Transcaucasia such as Serbia, Croatia, Bulgaria, Romania, Ukraine and
Georgia. Secondary markets are Bosnia Herzegovina, Macedonia,
Montenegro and Moldova.

Asked why he was setting up the business in Edinburgh Stewart Howitt
said: "Edinburgh is a major financial centre with an appetite for
superior returns and a long tradition of successful foreign
investments."

The company also has a number of strategic development partnerships in
place including with the Edinburgh headquartered RMJM, an
international firm of architects with offices throughout the UK,
Europe, US, Asia and the Middle East.

Castle European chief executive Robbie Morrison said: "Our investment
model is designed to maximise the opportunities, while de-risking
investment into these markets. Our approach is based on an extensive
experience of real estate investing and development, combined with an
in-depth knowledge of our target markets.

"This approach, supported by our strong local network of offices,
ensures we have a unique understanding of the investment landscape in
the region as well as the cultural, political and economic
environment."